DCIT, CC-II, KOLKATA, Kolkata V. Abhijeet Infrastructure Ltd., Kolkata

ITSSA 102/KOL/2014

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3417 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 13-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 07-03-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 05-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G HANGSHING
• Keywords: Deemed dividend

Judgement Text

1 ITA NOS.102-104/KOL/2014 ABHIJEET INFRASTRUCTURE LTD., AYS 2009-10 TO2011-12 , B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE .., /AND , ) [BEFORE SHRI A. T. VARKEY, JM & SHRI WASEEM AHMED, AM] I.T.(SS)A. NOS. 102 TO 104/KOL/2014 ASSESSMENT YEARS: 2009-10 TO 2011-12 DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-II, KOLKATA VS. ABHIJEET INFRASTRUCTURE LTD., (PAN: AABCA0975E) APPELLANT RESPONDENT DATE OF HEARING 05.07.2017 DATE OF PRONOUNCEMENT 13.09.2017 FOR THE APPELLANT SHRI G. HANGSHING, CIT, DR FOR THE ASSESSEE/CROSS OBJECTOR SHRI MIRAJ D. SHAH , A.R ORDER PER SHRI A.T.VARKEY, JM ALL THESE APPEALS PREFERRED BY THE REVENUE ARE AGAI NST THE COMMON ORDER OF LD. CIT(A), CENTRAL-III, KOLKATA DATED 25.03.2014 FOR A YS 2009-10 TO 2011-12. SINCE ISSUES ARE COMMON AND FACTS ARE IDENTICAL, WE DISPOSE OF A LL THESE APPEALS BY THIS CONSOLIDATED ORDER FOR THE SAKE OF BREVITY AND CONVENIENCE. 2. THE MAIN GRIEVANCE OF THE REVENUE IS AGAINST THE ACTION OF LD. CIT(A) IN DELETING THE ADDITION OF DEEMED DIVIDEND MADE U/S. 2(22)(E) OF T HE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). SINCE THE ISSUES INVOLV ED IN ALL THE APPEALS ARE COMMON THE APPEAL FOR AY 2009-10 IS CONSIDERED AS LEAD CASE AND THE O RDER PASSED WILL BE FOLLOWED IN OTHER ASSESSMENT YEARS ALSO. 3. THE MAIN GRIEVANCE OF THE REVENUE IS AGAINST THE ACTION OF THE LD. CIT(A) IN DELETING THE ADDITION OF DEEMED DIVIDEND OF RS.2,00,54,672/- MADE U/S. 2(22)(E) OF THE ACT. THE AO NOTED THAT DURING THE FY 2008-09 (AY 2009-10), THE UNSECURED LOAN TAKEN BY ASSESSEE HAS INCREASED BY RS.2,00,54,672/- AS COMPARED TO THE OP ENING BALANCE OF RS.26,19,80,445/-. ACCORDING TO THE AO, THE INCREASE IN THE UNSECURED LOAN WAS MAINLY ON ACCOUNT OF INTEREST CHARGED BY M/S. JAIPL AMOUNTING TO RS.1,70,54,672/- (INTEREST RS.2,20,51,554/- - 2 ITA NOS.102-104/KOL/2014 ABHIJEET INFRASTRUCTURE LTD., AYS 2009-10 TO2011-12 RS.49,94,882/- TDS) ON THE OUTSTANDING BALANCE OF U NSECURED LOAN. TAKING NOTE OF THE FACT THE ASSESSEE COMPANY HAD INVESTED TO THE EXTENT OF 26% OF PAID UP EQUITY SHARE CAPITAL OF M/S. JAIPL, ACCORDING TO AO, THE SAID AMOUNT OF RS .2,00,54,672/- NEEDS TO BE TREATED AS DEEMED DIVIDEND U/S. 2(22)(E) OF THE ACT. AGGRIEVE D, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO WAS PLEASED TO DELETE TH E SAME. AGGRIEVED, THE REVENUE IS BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE MATERIALS AVAILABLE ON RECORD. WE NOTE THAT THE ASSESSEE COMPANY WAS HAVING 26% PA ID UP EQUITY SHARE CAPITAL OF M/S. JAIPL. THE AO HAS TAKEN NOTE OF THE FACT THAT ON V ERIFICATION OF M/S. JAIPLS BALANCE SHEET AS AT 31.03.2009, IT WAS FOUND THAT ITS ACCUM ULATED PROFIT AS ON 31.03.2009 STOOD AT RS.6,63,57,285/- WHEREAS THERE WAS ONLY ACCUMULATED LOSS AS ON 31.03.2008. THE AO ALSO NOTED THAT THE PROFIT OF RS.6,63,57,285/- WAS EARNE D BY THE LENDER COMPANY M/S. JAIPL IN THE FY 2008-09 WHICH IS THE ASSESSMENT YEAR UNDER C ONSIDERATION. ACCORDING TO THE AO, THE UNSECURED LOAN TAKEN BY THE ASSESSEE HAS INCREA SED BY RS.2,00,54,672/- AS COMPARED TO THE OPENING BALANCE OF RS.26,19,80,445/-. THE AO A LSO ACCEPTED THE FACT THAT THE INCREASE IN UNSECURED LOAN WAS MAINLY ON ACCOUNT OF INTEREST CHARGED BY M/S. JAIPL AMOUNTING TO RS.1,70,54,672/- ON THE OUTSTANDING BALANCE OF UNSE CURED LOAN. THE AO THEREAFTER, WAS OF THE VIEW THAT THE AMOUNT OUTSTANDING I.E. THE LOAN AS WELL AS THE INTEREST OF RS.2,00,54,672/- NEEDS TO BE TREATED AS DEEMED DIVIDEND U/S. 2(22)(E ) OF THE ACT. THE LD. CIT(A) HAS TAKEN NOTE OF THE PROVISION OF SECTION 2(22)(E) OF THE AC T WHICH IS REPRODUCED BELOW: ANY PAYMENT BY A COMPANY, NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, OF ANY SUM (WHETHER AS REPRESENTING A P ART OF THE ASSETS OF THE COMPANY OR OTHERWISE) (MADE AFTER THE 31 ST DAY OF MAY, 1987, BY WAY OF ADVANCE OR LOAN TO A S HAREHOLDER, BEING A PERSON WHO IS THE BENEFICIAL OWNER OF SHARE S (NOT BEING SHARES ENTITLED TO A FIXED RATE OF DIVIDEND WHETHER WITH OR WITHOUT A RIGHT TO PART ICIPATE IN PROFITS) HOLDING NOT LESS THAN TEN PER CENT OF THE VOTING POWER, OR TO ANY CONCERN IN WHICH SUCH SHAREHOLDER IS A MEMBER OR A PARTNER AND IN WHICH HE HAS A SUBSTANTIAL INTEREST (HEREAFTER IN THIS CLAUSE REFERRED TO AS THE SAID CONCERN) OR ANY PAYMENT BY ANY SUCH COMPANY ON BEHALF, OR FOR THE INDIVIDUAL BENEFIT, OF ANY SUCH SHAREHOLDER, TO THE EXTENT TO WHICH THE CO MPANY IN EITHER CASE POSSESSES ACCUMULATED PROFITS. 5. THE LD. CIT(A) TOOK NOTE THAT THERE SHOULD HAVE BEEN A PAYMENT MADE BY THE COMPANY M/S. JAIPL WHICH IS EVIDENT FROM THE OPENIN G PHRASE OF THE CLAUSE (E) OF SEC. 2(22) OF THE ACT WHICH STATES ABOVE ANY PAYMENT BY A COMPANY. WE NOTE THAT THERE WAS NO PAYMENT OF ANY ADVANCE OR LOAN TO THE ASSESSEE C OMPANY IN THIS RELEVANT ASSESSMENT YEAR. WE ALSO NOTE FROM THE ASSESSMENT ORDER ITSELF THAT THE AO HAS NOTED THAT THE LENDER 3 ITA NOS.102-104/KOL/2014 ABHIJEET INFRASTRUCTURE LTD., AYS 2009-10 TO2011-12 COMPANY M/S. JAIPL HAD ACCUMULATED LOSS AS ON 31.03 .2008. SINCE THERE WAS NO PAYMENT MADE IN THE FORM OF LOAN OR ADVANCE TO THE ASSESSEE COMPANY FROM M/S. JAIPL IN THE RELEVANT ASSESSMENT YEAR AND OTHER ASSESSMENT YEARS BEFORE US, FROM THE ACCUMULATED PROFITS, THE DEEMING PROVISION U/S. 2(22)(E) OF THE ACT IS NOT ATTRACTED. WE NOTE THAT IN THE EARLIER YEAR I.E. BEFORE AY 2009-10 THE ASSESSEE HA D GOT THE LOAN FOR AN INTEREST RATE FIXED AND WE NOTE THAT IN THE EARLIER YEAR AS NOTED BY TH E AO ITSELF THAT ON 31.03.2008 THE LENDER COMPANY WAS ON ACCUMULATED LOSS. MOREOVER, WE NOTE THAT NO ADVANCE OR LOAN HAS BEEN MADE BY THE LENDER COMPANY FROM THE ACCUMULATED PRO FIT IN THESE ASSESSMENT YEARS AND, THEREFORE, SECTION 2(22)(E) OF THE ACT IS NOT ATTRA CTED AT ALL, SO, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN ALLOWING THE APPE AL OF THE ASSESSEE AND WE ARE INCLINED TO DISMISS ALL THE APPEALS OF THE REVENUE. 6. IN THE RESULT, ALL THE APPEALS OF THE REVENUE AR E DISMISSED ORDER IS PRONOUNCED IN THE OPEN COURT ON 13.09.20 17 SD/- SD/- (WASEEM AHMED) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 13TH SEPTEMBER, 2017 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT DCIT, CENTRAL CIRCLE-II, KOLKATA. 2 RESPONDENT M/S. ABHIJEET INFRASTRUCTURE LTD., EN- 1, INSIGNIA TOWER, SECTOR-V, KOLKATA-91. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, SR. PVT. SECRETARY